Business Secretary Greg Clark said reviving Britain’s flagging productivity lies at the heart of the industrial strategy he was expected to unveil it on Monday to help chart the future of Britain’s economy as the country leaves the EU.
While Britain would pursue the strategy “regardless” of Brexit, the plan will take the sting out of the uncertainty sparked by the UK’s EU departure, Clark said in London before Monday’s publication of the flagship policy, which was also preceded by an announcement that health-care company Merck & Co. and diagnostics provider Qiagen NV will set up new research facilities in Britain.
“Until we get a final agreement” on Brexit, “clearly there is going to be some uncertainty,” Clark said. “So it seems to me that it’s especially important to cast ahead to the long term and provide as much clarity as you can about what the fundamentals of our business environment are going to be. That’s what we’re doing in the industrial strategy.”
Prime Minister Theresa May has put the strategy at the core of an effort to define her administration beyond Brexit, which threatens to overwhelm the civil service and dominates the legislative calendar. It’s intended to provide an anchor for companies, many of which have already begun enacting contingency plans in case Britain doesn’t strike a trade deal with the EU.
May is trying to persuade her 27 EU counterparts to agree in December to advance from exit negotiations to discuss future trade, as well as a two-year implementation period to provide clarity for business. To do so, May needs to demonstrate that she’s made progress in three areas: citizens’ rights, the border with Ireland and Britain’s exit payment.
Survey data from the Confederation of British Industry illustrate the urgency: some 10 percent of companies have started implementing plans for a “no-deal scenario.” By March, that’s expected to increase to 60 percent.
Two days before becoming PM in 2016, May promised an industrial strategy “to get the whole economy firing.” Clark published a draft plan in January, including proposed “sector deals” between different industries and ministers.
To highlight the immediate impact of those deals, Clark’s department said in a statement that MSD, as Merck’s business is known
outside the US and Canada, will
establish a new life-sciences research facility in the UK supporting 950 new jobs.
For its part, Qiagen plans to develop a genomics campus in Manchester, creating as many as 800 jobs. The Financial Times valued the two investments at a combined $1.33 billion. Clark said other investments will follow in the 64-billion-pound life-sciences industry, one of four to strike a sector deal.
“This shows adopting a long-term strategy can have an immediate effect,” Clark said. “There is a pipeline of investments that are going to be made over the weeks ahead by companies big and small in life sciences. These investments are because of the strategic commitment that we’ve made to the sector.” The plan is Britain’s first explicit industrial strategy since Margaret Thatcher was prime minister in the 1980s. With it, May hopes Britain will seize the leadership in industries of the future, including robotics, clean energy and transportation.
The challenge that May’s government faces was laid bare in the budget statement by Chancellor of the Exchequer Philip Hammond, who revealed forecasts downgrading growth predictions for the next five years as a result of flagging productivity and Brexit headwinds.
The UK’s low productivity— workers produce in five days what Germans and Americans do in four—has baffled economists and policy makers for years. Output per hour is back to levels before the financial crisis, but its rate of growth has yet to recover.
May and Hammond announced measures to buttress the industrial strategy, including investments in teaching mathematics, the establishment of a 1.7 billion-pound fund to invest in regional transport and a goal to boost research and development spending to 2.4 percent of economic output in 2027.